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Urban Outfitters Net Income Up 38.6% in Q1

Comparable retail net sales, which include direct-to-consumer channel sales, increased nine percent in the period.

Urban Outfitters Inc. said Thursday that net income rose 38.6 percent to $47 million in the first quarter ended April 30, compared with $33.96 million in the year-ago quarter. Earnings per diluted share rose 39 percent to 32 cents from 23 cents a year earlier.

This story first appeared in the May 21, 2013 issue of WWD.  Subscribe Today.

Total net sales for the company, which operates the Anthropologie, BHLDN, Free People, Terrain and Urban Outfitters chains, were $648 million, a 14 percent increase from $568.9 million for the same 2013 quarter. Comparable retail net sales, which include direct-to-consumer channel sales, increased 9 percent. Comparable retail segment net sales jumped 44 percent at Free People, 8 percent at Anthropologie and 6 percent at Urban Outfitters. Wholesale net sales rose 16 percent.

“Our focus on the direct-to-consumer channel has paid off nicely, and we plan to continue to make the investments necessary to support its robust growth,” said Richard Hayne, president and chief executive officer of Urban Outfitters Inc. Web traffic rose almost 20 percent year-over-year, and new direct-to-consumer growth was 46 percent.

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David McCreight, ceo of Anthropologie, said comps grew in response to some of the changes the brand made in apparel. “We are continuing to work on increasing the appeal of the offering, becoming more nimble in product design, improving the accuracy of store allocations and continuing the pace of online development,” McCreight said. “We plan on expanding the product range in existing categories as well as adding adjacent categories. We’re going to continue reaching new customers and driving further geographic expansion.”

Product expansion grew 46 percent in the first quarter. McCreight cited Anthropologie petites, which, based on results, will be rolled out to additional stores in fiscal year 2014. As for Free People intimates, another new category, the brand is in discussions with potential partners, Hayne said.

The gross profit rate improved by 125 basis points in the first quarter, primarily due to a reduction in markdowns driven by improvements at the Anthropologie brand. Selling, general and administrative expenses as a percentage of net sales decreased by 70 basis points compared with the prior-year period, driven by strong retail sales.

Hayne outlined four initiatives for fiscal 2014: expand and enhance the direct-to-consumer channel, continue to build stores in underpenetrated U.S. markets and expand in international markets and expand product categories and enter adjacent businesses through licensing, partnerships, joint ventures and/or acquisitions.

In April, Free People wholesale opened its first pop-up shop in Tokyo’s Shibuya district. Free People will work with partner World Co. Ltd. to launch a Japan direct-to-consumer business.

Urban Outfitters is also looking at opportunities in Japan. “We’re involved in conversations with people in the market about opportunities, but there are no specifics to announce,” said Ted Marlow, ceo of Urban Outfitters Group.